Poles move to privatize businesses Party member shows way to capitalism

March 10, 1991|By Kay Withers | Kay Withers,Special to The Sun

KIELCE, POLAND — Witold Zaraska is one of the post-Communist world's newest breed of managers -- major shareholder as well as chief executive of a large private enterprise.

He is also one of Poland's old breed of managers -- a Communist Party member appointed with party approval to head a state-run conglomerate called Exbud.

What makes Mr. Zaraska unique is that he built the state-owned company himself and, in effect, bought himself out in one of the first transactions in Poland's long drive to privatize its command economy.

"The state sold the firm to its creator," he said during an interview in his office here.

Exbud, a construction firm that builds large projects such as hospitals both in and outside of Poland, was sold in December to private shareholders.

It began operations in 1977 at the urging of Mr. Zaraska, an authority in the field. The state gave only permission, and Mr. Zaraska borrowed the one million zlotys he needed to set up.

"From the point of view of property Exbud is not the state's," Mr. Zaraska said wryly. "But in 1977 there could be no private firm of this type." Just the same, Mr. Zaraska ran Exbud like a private firm, transforming it into one of Poland's few profitable enterprises. He built projects in Austria and Germany, Czechoslovakia, Hungary, and the Soviet Union, Iraq and Libya.

Last year he recorded a turnover of $120 million. Profits have long averaged between 20 percent and 25 percent.

With the fall of communism and the collapse of the command economy, Exbud was clearly a prime candidate for privatization under Poland's ambitious program to sell off about 8,000 state enterprises and switch to a market economy.

In the December sale of five large enterprises, Exbud sold out immediately, 28 percent oversubscribed.

Mr. Zaraska got a 10 percent share (the maximum the state allowed him), his board members got 7 1/2 percent, the international advertising group ITI (at the urging of Mr. Zaraska) got 17 1/2 percent, Exbud workers got 20 percent (at a preferential price) and the general public bought 45 percent.

A feisty 54-year-old of Napoleonic build and craggy countenance, Mr. Zaraska is not a modest man. His conversation makes liberal use of the first-person singular. He evidently delights in the accouterments of corporate power -- the cars, the curiously impersonal, almost unused executive penthouse above his office, the magnate's mansion.

The large modern executive floor at the Exbud building here proclaims in foot-high gold letters:

CHAIRMAN OF THE BOARD

WITOLD ZARASKA

Employees are tolerant. "Nobody considers this boasting," said Zbigniew Kaleta, a young engineer at Exbud's new, modern Volkswagen service station. "He built all this without state funding. Everyone here respects him."

In a country with little to be proud of at present, Mr. Zaraska gives Poles back their self-respect. "When a foreign businessman comes here I say, 'How can I help you?' " he said. "It hurts me to see Poland with its hand out."

It is hoped that privatization will streamline Poland's economy into profitability.

By his own account, Mr. Zaraska's courage and stubbornness successfully resisted Communist attempts to insert party hacks into the managerial echelons or bog Exbud down in bureaucracy.

"But a state firm had a corset which limited freedom," he said. "Now, as a private firm, we can create our own system of motivation."

Which is not necessarily money. For years Mr. Zaraska made only a few hundred dollars a month, culminating in $1,200 in 1990. "But if you're a musician you play whether you're paid or not," he said.

Ownership has given him "a Western manager's salary" -- but also a Western manager's problems. "What a time to become a private entrepreneur," he commented grimly, "with a recession worldwide."

That goes double and triple for other Polish companies now facing the uncertainties of the marketplace.

Of the five large businesses privatized at the same time as Exbud, three -- the Prochnik clothing factory, the Krosno Glassworks and the speaker manufacturer Tonsil -- failed to arouse public interest until the state found an investor willing to take a large block of shares.

Among the 20 or so large enterprises that will be sold this year on the open market in a new privatization drive will be Poland's travel giant, Orbis; the former hard-currency store chain, Pewex; and the Dom Centrum department store complex. About 150 other large enterprises are being broken up, with the unprofitable sectors to be liquidated and the going concerns leased or sold.

There are, however, limits to how far Poland can go with the sale ofbusinesses on the open market.

"There is only limited capital in Poland," said Jan Maciejewicz, an economist at DRT Poland, designated by the government to work out broader privatization schemes. "There are also limitations on foreign capital, in that permission from the Foreign Investment Agency is needed in order to invest over 10 percent. And there is limited interest abroad."